Tax Sensitive Portfolio Transition Analysis instructions by 1szbxl

VIEWS: 3 PAGES: 1

									                                  Account Specific Portfolio Transition Analysis
The following steps provide an accurate method of determining if there are tax advantages to moving specific SEI accounts from an ATM Portfolio
to a Tax-Sensitive Portfolio. Additional instructions on gathering your client’s account data from Portfolioaccess.com and a Microsoft Excel-based
calculator can be downloaded from our web site, http://www.seic.com/iag, under Client News.

Gather Account Data                                                              Assumptions for Capital Gains Distributions
The following information is needed for you to do an analysis on your            One of the primary factors in determining whether to move an account
clients’ accounts. You can obtain this information from                          to the Tax-Sensitive Portfolios is how much tax burden can be avoided
Portfolioaccess.com or possibly from your own portfolio management               by transferring assets before Short and Long Term Capital Gains
system.                                                                          Distribution are made by the funds. The fund estimates below, which are
                                                                                 based on data through 8/31/00, should be used in that determination.
1.   Account #/Client Name.                                                           1. SEI Small Cap Growth Fund
2.   Number of Small Cap Growth Fund and Small Cap Value Fund                                   a. Estimated Short Term Capital Gains distribution:
     shares in account.                                                                               $4.2495 per share
3.   The Short Term Unrealized Gain or Loss for the Small Cap Growth                            b. Estimated Long Term Capital Gains distribution:
     and Small Cap Value Funds.                                                                       $2.5511 per share
                                                                                      2. SEI Small Cap Value Fund
4.   The Long Term Unrealized Gain or Loss for the Small Cap Growth
                                                                                                a. Estimated Short Term Capital Gains distribution:
     and Small Cap Value Funds.
                                                                                                      $0.3821 per share
5.   The account owner’s applicable income tax bracket or an assumed                            b. Estimated Long Term Capital Gains distribution:
     tax rate for short-term capital gains.                                                           $0.1309 per share

Scenario 1: Calculate the Potential Tax Liability for Small Cap Funds Based on This Year’s
Capital Gains Distributions
First determine the potential tax liability for the Small Cap Growth and Small Cap Value Funds based on the 2000 capital gains distributions. For this
calculation, you need the number of shares owned in each fund, the Capital Gains distribution assumptions from above, and the account owners
applicable income tax rate or other assumed tax rate for short-term capital gains.
Calculate the potential tax liability for both the Small Cap Growth and Small Cap Value Funds.
     1.   Short Term Capital Gains Distribution =                                   4.   Long Term Cap Gains Taxes =
          (# of Fund shares) X (Est Short Term Cap Gain per Share)                       (Step 3. result) X (Long Term Cap Gains Tax Rate)
     2.   Short Term Cap Gains Taxes =                                              5.   Estimated Capital Gains Distribution Tax Liability for Fund =
          (Step 1. result) X (Short Term Cap Gains Tax Rate)                             (Step 2.) + (Step 4.)
     3.   Long Term Cap Gains Distribution =                                        6.   Repeat Steps 1. through 5. for the next fund and total both
          (# of Fund shares) X (Est Long Term Cap Gain per Share)                        amounts for the total tax liability for both funds.

Scenario 2: Calculate the Potential Tax Liability for Small Cap Funds Based on Transferring
Assets to the Tax-Managed Small Cap Fund.
The transition of an ATM portfolio to a Tax-Sensitive portfolio centers on the Small Cap Growth and Small Cap Value Funds in the ATM portfolios.
Assets will be transferred from these two funds to the Tax-Managed Small Cap Fund in the Tax-Sensitive Portfolios. As such, we only need to
evaluate the effects of transferring assets from the two small cap funds to the Tax-Managed Small Cap Fund. For this calculation you’ll need the
following data:
1.   The Short Term Unrealized Gain or Loss for the Small Cap Growth and Small Cap Value Funds
2.   The Long Term Unrealized Gain or Loss for the Small Cap Growth and Small Cap Value Funds
3.   The account owner’s applicable income tax rate or an assumed tax rate for short-term capital gains.
4.   The long-term capital gains tax rate, which is currently 20%.
Calculate the potential tax liability for both the Small Cap Growth and Small Cap Value Funds
1.   Short Term Unrealized Gains Tax Liability =
     (Short Term Unrealized Gain/Loss) X (Income Tax Rate or Assumed Short Term Cap Gains Tax Rate)
2.   Long Term Unrealized Gains Tax Liability =
     (Long Term Unrealized Gain/Loss) X (Long Term Capital Gains Tax Rate)
3.   Total Unrealized Gains Tax Liability for Fund =
     (Step 1.) + (Step 2.)
4.   Repeat Steps 1. through 3. for the next fund and total both amounts for the total unrealized gains tax liability for both funds.

Compare the potential tax liabilities for each scenario.
Compare the outcomes of each scenario. If the potential taxes based on this year’s estimated capital gains distributions for the Small Cap Growth and
Value Funds are equal to or greater than the taxes based on transferring the fund assets to the Tax-Managed Small Cap Fund, then consider
transferring this account to a Tax-Sensitive Portfolio.

                                              For Financial Intermediary Use Only. Not for Public Distribution.
This is intended to provide authoritative information. It does not, however, constitute tax, accounting, or investment advice. This information may not be
applicable, and each investor's specific circumstances should be considered before taking any action.

								
To top